Paying employees the right amount at the expected time every time is vital to keeping them loyal to your company. That said, payroll management is a time-consuming effort for even the most organized employers. Online payroll management systems free employers from mundane tasks while keeping them compliant with the law.
A bonus: Online payroll management gives companies data to help them focus less on payday-to-payday details and more on the big picture of compensation strategies. Here is how it works:
What are Online Payroll Management Systems?
Whether you are looking at a payroll “system” or “service,” these cloud-based tools handle payroll functions often performed in-house by HR or specialized payroll staffers. Online payroll systems calculate and issue employee pay, withhold deductions, and deal with taxes.
Payroll systems handle the full range of employee pay overtime, sick leave, paid time off, commissions, bonuses and can apply special circumstances like garnishments. These systems handle withholding for benefits like health insurance, and some track flexible spending and medical savings accounts.
Employers work with vendors on initial setup, choosing the payroll schedule and, most labor-intensive up front, entering employee data. Employers select payment options, like direct deposit and checks. Some systems even let employers issue prepaid debit cards.
After setup, the employer just enters employee hours and lets the system run.
Reducing The Burden
Online payroll systems offload the minutiae onto an automated process, overseen by a vendor, taking place on systems the user doesn’t have to maintain.
For large companies, online payroll liberates HR to focus on larger workforce management issues. For small companies, online payroll saves money and time for multitasking staffers. Employers of all sizes can opt for varied payroll reports to show them how they’re using pay and benefits.
Online payroll reduces the risk of human error because staff aren’t calculating or entering data themselves. Employers save money because they no longer need staffers dedicated to payroll.
These systems keep users compliant with the law, too. Tax laws change so frequently that staying up-to-date is an ongoing chore. Online payroll systems do the compliance work for the employer, updating payrolls to adhere to the legal changes. Most online payroll services guarantee they will file clients’ taxes accurately.
Many systems give employees access to their own payroll information, including pay stubs and W-2s, usually through apps and portals. Employees enjoy greater engagement, and employers can rest assured knowing that any discrepancies will be identified.
Online payroll providers are making pandemic-related changes. Some systems offer employers resources for navigating the Payroll Protection Program. Some are providing “on-demand payroll,” letting employees “access their earned wages at any time instead of having to wait for their normal payday,” writes Chad Brooks at Businessnewsdaily.com.
Cost Options
Companies can purchase payroll management systems for a base rate of $25 to $40 per month, with some rates as high as $150 per month for certain services, plus a fee per employee that can range from $2 to $15. Some contracts let employers buy services per payroll run, rather than on a monthly basis. Initial setup fees are usually separate. Unsure about committing? Most vendors provide free one- or two-month trials.
Online payroll management systems let cloud computing crunch the numbers, while giving companies help with taxes and benefits management.
